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https://learn.extension.org/events/2591

This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Readiness Policy, U.S. Department of Defense under Award Numbers 2014-48770-22587 and 2015-48770-24368.

What is Financial Fitness & How is it Measured?

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MFLN  Intro

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Dr. J. Michael Collins •  Faculty Director at the Center for Financial Security

at the University of Wisconsin. •  Associate Professor at the La Follete School of Public

Affairs and at the School of Human Ecology. •  Family Economics Specialist for UW-Extension and

Cooperative Extension •  Collins studies consumer decision-making in the

financial marketplace, including the role of public policy in influencing credit, savings and investment choices.

Today’s Presenter

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What is Financial Fitness & How is it Measured? Dr. J. Michael Collins, University of Wisconsin-Madison

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+Time for a poll

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Common Goal

§ Help people be “better off” §  Independence §  Control §  Stability

§  How can people better manage the

resources they have to reach a higher level of well-being?

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Ideal Outcomes

§  Develop stronger financial skills

§  Empower to adapt to new economic contexts

§  Increased self-efficacy and self-control

§  More focused attention and reduced inattention

§  Support planned, goal-driven financial behaviors

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Challenge for Field

1.  What are the outcomes?

2.  What is the return on investment? …costs and benefits

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n  Measures we use all the time §  Weight or blood pressure

§  Weight for monitoring heart function §  Weight for competing in diet competition

n  Tests - use only sometimes §  MRI or blood draw

Both are important, but have different purposes and uses

§  Likely we are more focused on frequent “all the time” type measures

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Measuring as a Task

Pros Cons

Self Reported Survey

Can be collected in service delivery

Self-report bias; lack of cooperation, especially for

follow-up—need incentives.

Credit report/score Widely used

Proprietary ; 'thin' files; slow to change.

Account balances

Directly observe behavior; validity

Very “noisy” snapshot; requires client consent

Public records Accessible Low probability events;

uneven reporting. 13

Three Legs of Financial Fitness

§  Financial Literacy §  Knowing What to Do

§  Financial Capability §  Skills to Do

§  Financial Inclusion §  Opportunity to Do

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§  Standardized measures? §  Health care, public health, nutrition

§  Ex. Outcomes per health care expenditure

§  Financial programs use wide range of outcomes

§  Common “yardsticks” will help. Two examples:

§  Financial Capability Scale (behavior) §  Financial Well-being Scale (subjective)

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Measuring Outcomes

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Financial  Capability  Scale  I    

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Financial  Capability  Scale  II    

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Financial  Capability  Scale  Components:  Change  Over  Time  

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+Time for a poll

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Financial Wellbeing

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Social

and

Economic

Environment

Personality & attitudes

Decision context

Knowledge

& skills

Financial well-being

Behavior &

Actions

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Financial  Well-­‐being  I  

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Financial  Well-­‐being  II  

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Scoring  the  Financial    Well-­‐being  Scale…        Using  the  Look  Up  Table  

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01

23

4FW

B by

Ass

ets

Low FWB Moderate FWB High FWB

01

23

4FW

B by

Fin

anci

al S

tress

Low FWB Moderate FWB High FWB

05,

000

10,0

0015

,000

FWB

by E

mer

Sav

ings

Low FWB Moderate FWB High FWB

0.5

11.

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2.5

FWB

by D

ebt

Low FWB Moderate FWB High FWB

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§  No measure is perfect §  Some measures are better than none §  Don’t let the perfect be the enemy of the good.

§  Balancing strategies for collecting data §  Self reported data AND Administrative data

§  Not about ‘Winners’ and ‘Losers’ §  Measures are complements not substitutes §  Expect constant improvements and refinements

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Moving Forward

Illustrative  Studies…  §  Retirement Savings Education: Quasi-experiment with employees:

increased retirement deferrals by 47 percent ($30 / month)

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19%  

13%  

18%  17%  

12%  

16%  

Georgia   Idaho   Texas  

Before   ALer  

High School Financial Education: 90-Day Loan Delinquency Rate by Graduation Year Before & After State Mandate

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+Time for a poll

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What’s Next? 1.  Build Measurement Capacity

§  Training & education §  Developing systems

2.  Deploy Technology

§  Software, web-based services

3.  Practice: Fidelity, Consistency & Quality §  Need “rules” (and enforcement) §  Context/process, wording, mode, timing

4.  Standardization & Aggregation

§  Across time, program and geography 35

Homework

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§  Try the Financial Capability Scale. What is your score (0-8)? http://fyi.uwex.edu/financialcoaching/measures/

§  Try the Financial Well-being Scale. Calculate your score (with the look-up table)

http://www.consumerfinance.gov/data-research/research-reports/financial-well-being-scale/

§  How could you use either scale in your own work with clients?

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Resources

§  Financial  Capability  Scale  Brief  §  hMp://fyi.uwex.edu/financialcoaching/files/2013/07/

CFS_Research_Outcomes_Brief-­‐Coaching-­‐MetricsJMC1.pdf  

§  Financial  Well-­‐being  Scale  Brief  §  hMp://www.consumerfinance.gov/financial-­‐well-­‐being  

§  Center  for  Financial  Security  §  hMps://cfs.wisc.edu/  §  hMp://fyi.uwex.edu/financialcoaching/    

What is one significant thing you learned today?

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Connect with MFLN Personal Finance Online!

MFLN Personal Finance

MFLN Personal Finance @MFLNPF

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MFLN  Intro

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Evaluation and Continuing Education Credits/Certificate

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MFLN Personal Finance is offering 1.5 credits for AFC-credentialed participants through AFCPE and CPFC-credentialed participants through FinCert for today’s webinar. Please complete the post-test for today’s session at: https://vte.co1.qualtrics.com/SE/?SID=SV_8eJaDnO5RxbuNyl Must pass post-test with an 80% or higher to receive certificate. Please complete the evaluation after the last VLE event you attend: https://vte.co1.qualtrics.com/jfe/form/SV_d0aEDkKqPE2lJmR

Personal Finance Upcoming Events

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VLE Session 2: Positive Personality Traits of Financially Fit People

•  Date: Wednesday, June 15, 2016 •  Time: 11 Eastern •  Location: learn.extension.org/events/2592

VLE Session 3: Wealth Building With Savings, Investing & Windfalls

•  Date: Thursday, June 16, 2016 •  Time: 11 Eastern •  Location: learn.extension.org/events/2593

VLE Wrap Up Discussion

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•  Thursday, June 16, 2016 from 1-1:30pm Eastern •  https://learn.extension.org/events/2594 Join us for an interactive discussion of the resources, tools and quizzes shared during the Virtual Learning Event, as well as your own experience as practitioners. Connecting with a mic-enabled headset is encouraged!

www.extension.org/62581

45 This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Readiness Policy, U.S. Department of Defense under Award Numbers 2014-48770-22587 and 2015-48770-24368.